Page 43 - ePaper
P. 43
Chapter 1
The legacy of the crisis:
resilience and challenges ( )
1
1. Introduction under-investment in education, levels of 2. The legacy
household debt, etc.) as well as their dif- of the crisis on
The most severe financial and economic cri - fering mixes of social and labour market the employment
sis to have hit Europe since the 1930s has policies both prior to, and during, the crisis. and social situation
had a major impact on the employment and
social situation across the Union. Unemploy - • Section 2 of the chapter reviews how 2.1. Long and protracted
ment, poverty and inequality have seriously labour markets and social outcomes recession
worsened in many countries and a return to have developed since the onset of the
pre-crisis levels is not foreseen before some recession, in particular with severe Various impacts of the economic
time. Individuals and households have been impacts for some groups and coun- downturn on employment
obliged to develop coping strategies in the tries and changes in participation to and incomes
face of the deteriorating economic situa - education and the labour market.
tion and with the prospect of only a slow Since 2008, the EU has experienced a
and uncertain recovery. All of this is liable to • Section 3 highlights the possible recession of exceptional magnitude and
have negative long-term effects on labour long-term consequences of unem - duration from which it has been slow to
market participation and to lead to a per- ployment and economic hardship emerge, with real GDP in 2014 exceeding
manent loss of human capital. Meanwhile, including potential scarring effects pre-recession levels by only around 1 % in
rising level of inequalities and the ability on unemployed young people, ‘cop- the EU and with euro area GDP still below
of institutions to deal with the crisis also ing strategies’ during the crisis and its 2007 level.
impacted the trust in institutions. the weakening trust in institutions.
This contrasts with the United States where
The recession has also been a live stress- • Section 4 analyses the developments real GDP is now 8 % higher than it was
test for both social protections and labour of social spending in terms of its three in 2007. Moreover, within the EU, there
market systems and institutions, with Mem - main functions: investment, stabilisation is a growing gap between the countries
ber States’ performances diverging in terms and protection and their link to labour that experienced a double dip recession in
of economic as well as of employment and market outcomes as well as the poten- 2012 and the others. Five years into the
social outcomes. They have shown differ- tial role of better synchronising benefits recession, real GDP remains substantially
ent degrees of resilience i.e. their capacity to the economic cycle for the resilience below (5 % or more) pre-crisis levels in
to limit the initial impact of the economic of Member States and the role of the many countries including Italy, Spain, Por-
shock on labour markets and incomes; to financing of social protection. tugal, Greece, Slovenia and Finland. This is
recover quickly; and to progressively ensure especially worrying, given the long-term
a job-rich and inclusive growth. • Section 5 investigates the impact of effects of the comparatively milder reces-
2
labour market institutions such as sion of the 1990s ( ) when employment
This chapter focuses on the potential con- unemployment benefits, employment rates declined and took several years to
3
tribution of employment and social policies protection legislation and active labour recover, notably in the Nordic countries ( ).
to resilience, paying particular attention to market policies during the recession as
2
the effects of imbalances (such as high well as policy changes since 2008. ( ) In the 1990s, most EU countries experienced
only one year of negative growth and after five
levels of unemployment and inequalities, years real GDP had increased by 5 to 15 %,
• The concluding section summarises with the exception of Sweden and Finland
which experienced long and deep recessions.
( ) By Laurent Aujean, Virginia Maestri, both the findings and the main pol- ( ) Social situation monitor, Scarring effects of
1
3
Filip Tanay and Céline Thévenot. icy implications. the crisis, Research note 06/2014.
41
The legacy of the crisis:
resilience and challenges ( )
1
1. Introduction under-investment in education, levels of 2. The legacy
household debt, etc.) as well as their dif- of the crisis on
The most severe financial and economic cri - fering mixes of social and labour market the employment
sis to have hit Europe since the 1930s has policies both prior to, and during, the crisis. and social situation
had a major impact on the employment and
social situation across the Union. Unemploy - • Section 2 of the chapter reviews how 2.1. Long and protracted
ment, poverty and inequality have seriously labour markets and social outcomes recession
worsened in many countries and a return to have developed since the onset of the
pre-crisis levels is not foreseen before some recession, in particular with severe Various impacts of the economic
time. Individuals and households have been impacts for some groups and coun- downturn on employment
obliged to develop coping strategies in the tries and changes in participation to and incomes
face of the deteriorating economic situa - education and the labour market.
tion and with the prospect of only a slow Since 2008, the EU has experienced a
and uncertain recovery. All of this is liable to • Section 3 highlights the possible recession of exceptional magnitude and
have negative long-term effects on labour long-term consequences of unem - duration from which it has been slow to
market participation and to lead to a per- ployment and economic hardship emerge, with real GDP in 2014 exceeding
manent loss of human capital. Meanwhile, including potential scarring effects pre-recession levels by only around 1 % in
rising level of inequalities and the ability on unemployed young people, ‘cop- the EU and with euro area GDP still below
of institutions to deal with the crisis also ing strategies’ during the crisis and its 2007 level.
impacted the trust in institutions. the weakening trust in institutions.
This contrasts with the United States where
The recession has also been a live stress- • Section 4 analyses the developments real GDP is now 8 % higher than it was
test for both social protections and labour of social spending in terms of its three in 2007. Moreover, within the EU, there
market systems and institutions, with Mem - main functions: investment, stabilisation is a growing gap between the countries
ber States’ performances diverging in terms and protection and their link to labour that experienced a double dip recession in
of economic as well as of employment and market outcomes as well as the poten- 2012 and the others. Five years into the
social outcomes. They have shown differ- tial role of better synchronising benefits recession, real GDP remains substantially
ent degrees of resilience i.e. their capacity to the economic cycle for the resilience below (5 % or more) pre-crisis levels in
to limit the initial impact of the economic of Member States and the role of the many countries including Italy, Spain, Por-
shock on labour markets and incomes; to financing of social protection. tugal, Greece, Slovenia and Finland. This is
recover quickly; and to progressively ensure especially worrying, given the long-term
a job-rich and inclusive growth. • Section 5 investigates the impact of effects of the comparatively milder reces-
2
labour market institutions such as sion of the 1990s ( ) when employment
This chapter focuses on the potential con- unemployment benefits, employment rates declined and took several years to
3
tribution of employment and social policies protection legislation and active labour recover, notably in the Nordic countries ( ).
to resilience, paying particular attention to market policies during the recession as
2
the effects of imbalances (such as high well as policy changes since 2008. ( ) In the 1990s, most EU countries experienced
only one year of negative growth and after five
levels of unemployment and inequalities, years real GDP had increased by 5 to 15 %,
• The concluding section summarises with the exception of Sweden and Finland
which experienced long and deep recessions.
( ) By Laurent Aujean, Virginia Maestri, both the findings and the main pol- ( ) Social situation monitor, Scarring effects of
1
3
Filip Tanay and Céline Thévenot. icy implications. the crisis, Research note 06/2014.
41
